Factors To Consider Ahead Of Wix.com's (WIX) Q1 Earnings

Wix.com Ltd. (NASDAQ:WIX) is set to report first-quarter 2019 results on May 16. Notably, the company has recorded a positive earnings surprise of 67.3% in the last reported quarter.

Past-Quarter Performance

In the last reported quarter, Wix delivered non-GAAP earnings of 42 cents per share, beating the Zacks Consensus Estimate of 30 cents. The bottom line was also higher than the year-ago quarter’s figure of 16 cent per share.

Total revenues surged 39% year over year to $164.2 million, surpassing the Zacks Consensus Estimate of $162 million.

What to Expect in Q1?

For the first quarter, the company expects revenues in the range of $172-$173 million, indicating an improvement in the range of 25-26% from the year-ago quarter.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 9 cents, unchanged for the last 30 days. This suggests growth of about 280% from year-ago reported figure. For quarterly sales, the consensus mark stands at $172.9 million, suggesting an improvement of 25.5% from the prior-year quarter.

The company also provided fiscal 2019 guidance. Management anticipates revenues in the range of $755-$761million, indicating growth in the band of 25-26% from the year-ago quarter.

Wix.com has returned 67.5% in a year’s time, substantially outperforming the industry’s growth of 5.6%.

Let’s see how things are shaping up prior to this announcement.

Factors at Play

Wix continues to launch a number of user-friendly applications to meet the requirements of dynamic retail environment, consequently adding to user base. In the last reported quarter, the company witnessed better-than-expected conversion and retention in user cohorts. The company added a total of 147,000 net premium subscriptions, up 24% year over year. This trend is expected to continue in the to-be-reported quarter.

Recently, the company unveiled a suite of 20 products named Ascend by Wix, which enable businesses to connect with and manage their customer base. This in turn aids them in competing with larger businesses online. This in turn is likely to aid the upcoming quarterly results.

The company also intends to launch Wix Turbo, a platform that enhances speeds across all Wix websites. The company also unveiled Wix Payments. The latest product is a complete payments platform designed to aid small businesses manage their financial flow addressing significant business challenges and helping them to grow. We believe Wix’s portfolio strength will help in expanding customer base and boost top-line growth in the first quarter.

The company also inked a deal with MyHeritage, which will be utilizing the Wix Answers Knowledge Base, ticketing system, and call center tools. Wix.com is also partnering with schools and universities all over the United States to make Wix part of the curriculum. We believe that these partnership deals bode well for the upcoming quarterly results.

Further, it is benefiting from retail’s rapid transition to mobile and social sales channels. We believe that massive growth in e-commerce spending also bodes well for Wix. Further, the company’s sound liquidity and cash flow reflects that it is making investments in the right direction.

Notably, all these factors will positively impact its results in the to-be-reported quarter and bolster customer base.

However, increasing investments on product development, infrastructure and platform continues to weigh on its bottom-line in the quarter under review. Further, lack of significant presence in the Asia-Pacific market and competition from peers add to woes.

Zacks Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

Wix has a Zacks Rank #2 and an Earnings ESP of -52.94%. This combination makes surprise prediction difficult. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are some stocks, which you may consider as our model shows that these have the right combination of elements to post an earnings beat in its upcoming release:

NIKE, Inc. (NYSE:NKE) has an Earnings ESP of +2.13% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Box, Inc. (NYSE:BOX) has an Earnings ESP of +3.85% and a Zacks Rank #3.

Dillard's, Inc. (NYSE:DDS) has an Earnings ESP of +3.95% and a Zacks Rank #3.

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